State University Revenues and Spending: 2000 to 2004

Every state university in the United States that receives some form of federal assistance, either directly or for its students, is required to submit detailed data to the federal government relating to its operations. The data are self-reported by the universities and are incorporated into the Integrated Postsecondary Education Data System by the Department of Education.

The data are not perfect. Included are data on commercial operations such as bookstores and university hospitals. Student data suffer from some deficiencies arising from students admitted outside the traditional fall semester or quarter, student transfers and some other problems. There may be variations in how different schools handle certain expenditure and revenue items in terms of categorizing them in the IPEDS database. While some of these problems are insignificant to our analysis (e.g., some of the data on student attrition), we would be the first to admit the numbers may be imperfect. However, these are the numbers that the universities themselves reported to the federal government.

Table 1 shows revenues received per full-time equivalent student at all 15 Michigan public universities in 2000 and again in 2004. As the universities’ lobbyists never tire of reminding legislators and the public, the 2000-2004 period was an era of falling real state university appropriations per FTE student. However, several items are noteworthy. With one exception — Ferris State University — revenues per FTE were higher in 2004 than in 2000 at every institution. Large revenue increases (more than 20 percent) were recorded by the University of Michigan at Ann Arbor, Michigan State University, Western Michigan University and Central Michigan University. Because the big "winners" were the larger schools, the average increase for all universities likewise exceeded 20 percent.

During the same period, the Consumer Price Index for All Urban Consumers rose slightly less than 10 percent, implying that real revenues per student also rose about 10 percent, or close to 2.5 percent per year. This was at a time when real incomes of Michigan families were showing actual declines.

In short, the evidence suggests that Michigan universities typically did not experience severe austerity during this period when families in the state were often forced to tighten their belts. The flagship Ann Arbor campus of the University of Michigan showed nominal revenue per student rising more than 30 percent from 2000 to 2004, or nearly 20 percent in inflation-adjusted terms. To be sure, the data include research and other grants, hospital revenues and other non-academic funds, but nonetheless the evidence supports the notion that University of Michigan-Ann Arbor was expanding its operations at a rapid rate at a time of genuine economic stress in the state.

Certainly there were some schools that faced some belt-tightening in an inflation-adjusted sense, most notably Wayne State, where in absolute dollars revenues per student were nearly flat; Ferris State, where they actually declined; and Michigan Technological University, where they rose less than the inflation rate, meaning a modest reduction in real revenues per student. But other schools generally had inflation-adjusted increases in spending.